Forex analytics. The dollar will let all the dogs go – ForexNews.PRO
A bad world is better than a good war. The end of the longest shutdown in history is nothing more than a truce. Postponing the healthcare battle between Democrats and Republicans to the end of the year. As early as the end of January, the government may close again. However, for now, financial markets are celebrating, and the loss of the safety cushion by the US dollar is turning into an increase in EURUSD quotes.
As in any war, something is irretrievably lost. The White House has said that the October employment and inflation reports may never see the light of day. The end of the shutdown is associated with the Fed’s exit from the fog, but the central bank will be forced to make decisions in December with a lack of information. When there is no complete picture, the risks of error increase.
The president of the Federal Reserve Bank of Boston, Susan Collins, said that the federal funds rate should be kept at the current level for some time. Its reduction may slow down or delay the process of returning inflation to the target. Her hawkish speech forced the futures market to reduce the chances of the Fed’s monetary policy easing in December to 55%. Before that, the probability ranged from 62-72%.
However, derivatives did not help greenback. According to Orbis, the value of the dollar ultimately rests on trust in US politics and institutions, and this trust is currently being undermined. A shutdown that has sunk into oblivion may be followed by a new one. Donald Trump will return to the practice of putting pressure on the Fed, and the cancellation of tariffs by the Supreme Court will hit the economy and allow other countries to laugh at the United States.
Previously, the dominance of the US dollar in Forex was due to high interest rates and steady economic growth, but now this foundation is weakening. ING believes that the greenback will continue to fall, and the EURUSD will rise to 1.22 by the fourth quarter of 2026 against the background of a decrease in the cost of hedging currency risks of investing money in American securities by non-residents. Its value depends on the Fed’s interest rates, which, according to the company, will fall by another 75 bps.
If so, then the EURUSD should really rise. According to Isabelle Schnabel, a member of the Governing Council, the ECB deposit rate is in the right place. Only any shocks in the eurozone economy can move it from there. The cycle of monetary expansion of the European Central Bank has been completed, so the fate of the main currency pair is solely in the hands of the Fed.
As macro statistics become available again, investors will behave like data dogs. They need to sniff every piece of information that hits the floor, because it could be food.
